Reader Mailbag: Listening

What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to five word summaries. Click on the number to jump straight down to the question.1. Handling surprise bonus2. Reporting suspected crimes3. Car purchase difficulties4. Diversification question5. Protein in diet6. Investing in vintage sports cards7. Roth TSP?8. Recovery in multiple ways9. How to start selling items10. Great dryer sheet tactic

Have you ever entered a conversation where your only goal is to listen and completely understand what the other person is saying?

I made a conscious effort to practice this skill quite often this week. I mostly did it by simply listening to what they were saying and then either rewording it in my own words to make sure I understood or ask a clarifying question.

What I found was that people loved to talk to me and they often felt like we had bonded after our conversation.

People yearn to be listened to.

Q1: Handling surprise bonus
My wife recently got a letter saying that she will be receiving a bonus of about $500 after taxes. This was not budgeted into our plan.

My question is this: We have been following a budget for the last several months and have categories built for most of our expenses (We just celebrated our first year of marriage, and didn’t combine our planning etc. until recently as we both have careers mine for the last 12 years.)

We are on a 4 year plan to pay off our c/c debt as well as most of a student loan, and have started an emergency fund. We are renting within our budget about 925 per month. Food costs are pretty reasonable. (we’re Vegan, and have found that eating this way is not only cheaper, but far more energy boosting and sustainable for our local area) Car we paid for in Cash.

Should we take the funds and fund our Emergency fund quicker? Put the extra funds towards paying down a card a bit faster? Or invest in Food/Silver/Gold for the coming Collapse (a bit tongue in cheek, but I am worried about the state of our fiat currency system.) We live in a City and have connected with a community and are learning how to garden etc.
– Alex

If you don’t have an adequate emergency fund, I’d put that money into your emergency fund. You’ll be incredibly glad to have it the next time an emergency happens and you don’t have to bring on additional debt to make it happen.

How much of an emergency fund should you have? I’d target having one that equals two months of living expenses for each dependent in your home once you have your high-interest debts paid off. Before that, I’d have an emergency fund of about $1,000.

I have mixed feelings about the food and gold investments. Gold is a very volatile investment. If you buy it, you’ll probably get some return on your money, but it’s going to be a very bumpy ride as long as you hold it. I personally would not buy gold while I was holding significant debt.

Q2: Reporting suspected crimes
A few days ago, I witnessed what appeared to be the tail end of an armed robbery. I considered calling the police, but I didn’t for a variety of reasons (I was in a hurry, I didn’t know for sure what was going on, etc.). Since then, I’ve been troubled by the whole thing. Is it my obligation to always report anything like that? What would you do?
– Angela

My rule of thumb is that I will report crimes in which someone or someone’s property is being damaged without their consent. No one deserves to be hurt or to be stolen from. I generally won’t report crimes in which everyone involved is consenting in the behavior. In that case, I just don’t view it as anything I need to pay any attention to. People should be left alone.

The tricky area is when someone is engaging in a behavior that could easily lead to damage of someone or someone’s property without their consent, such as drunk driving. I would lean toward reporting these situations, but it’s often a gut call.

In the chaos of the moment, like this one, I think it’s hard to criticize someone’s snap decision to report or to not report something when they’re an innocent bystander. It’s incredibly hard to tell what someone is interpreting in the heat of the moment. In other words, I really don’t think you did anything wrong.

Q3: Car purchase difficulties
My wife and I currently share a car (a wonderful 2007 Honda Civic with 110k miles), but I’ll soon be starting a job where I’ll need a car, rather than being able to rely on DC’s excellent public transit system. We’re currently considering small SUVs (e.g., Subaru Outback, Toyota Rav-4). We’re looking at cars of this size because we’re planning on starting a family in the relatively near future, and need the space when we take long drives (say from DC to Massachusetts) with a child, a 40lbs dog, and a cat (in a carrier). What’s frustrating is that we’ll only need a car that size for, at most, 40 hours of driving per year; the rest of the time, we could get by with a sedan that costs less and gets better gas mileage (Camry, Optima, etc.). Is there a way to get around this, such as renting a small SUV for the long trips, or are we stuck getting a bigger car than we need most of the time?
– John

It depends entirely on how frequent the trips are and whether you’d really use the vehicle at other times.

For example, if you travel twice a year on a long trip and you won’t use the vehicle for much else, the total cost of just renting will probably be cheaper compared to the cost of buying a big SUV versus a tiny economy car. On the other hand, if you travel once a month and will use the size for other purposes, then you’re likely better owning your own SUV.

Your first step is to really figure out how you’re going to be using it, in other words. The more frequently you use it, the more I’d lean toward ownership.

Q4: Diversification question
I am a budget junkie and like to run all sorts of numbers on my monthly expenses and savings. Recently I started looking at the big picture of my investments and am concerned that either I am not too diversified (have too much in stocks) or have too much cash on hand that is earning no interest and decreasing in value over time with inflation.

I am 32 with a single income family. I save 10% of my gross income in 401K and of save approx. 25% of my monthly take home pay each month. Over time I have been able to save about $114K in various investments with no debt. My diversification so far is,
Cash – $31K – 27% – Earning no interest, sitting in bank
FD/CD – $9K – 8% – Earning 10% interest, off-shore account with Tax implications
401K – $42K – 37% – Invested in a Target 2040 retirement fund, mix of traditional 401K and Roth 401K
Stocks – $32K – 28% – Invested in Stocks & ETF

As you can see almost 65% of my money is tied to the stock market directly through individual investments and indirectly through 401K and I almost have a year’s worth of emergency funds easily accessible in cash. How should I further diversify my money or how should I rebalance so I have the right mix.
– Charlie

I wouldn’t consider my 401(k) in this analysis, as it’s invested in a target retirement fund and will essentially diversify by itself.

As for the rest of it, I would spend some time evaluating your goals. What are you wanting to do with this money? Buy a house? Start a small business? Retire really early? Figure out your goal, then diversify based on that goal. If it’s far away, be heavily into stocks. If it’s close, slide things more into cash.

Also, if you’re truly getting 0% for your cash, consider a different bank. You should be at least getting 0.5% for that cash.

Q5: Protein in diet
How do you get enough protein on a vegan or vegetarian diet? You’ve been on both. How do you get your protein?
– Emily

Beans.

That’s the simple answer, anyway. I ate a lot of beans when I was vegan – at least once per day, on average. Chili. Bean soup. Tacos or burritos.

If you’re vegetarian, you have lots of sources for protein because milk and eggs are available to you.

Q6: Investing in vintage sports cards
I’m 70 years old. One of my most treasured possessions is a box of baseball cards I have from my childhood with some of my favorite players on the cards. My favorite players were the big sluggers like Ted Kluszewski and Roger Maris.

I know that the really old baseball cards like these have held their value over a long period of time so that they’re fairly good investments. I just retired in January and my wife passed away recently and so now I have more money than I know what to do with but I do want to leave something of value behind for my kids and grandkids.

I’ve been thinking about investing some of my money into other baseball cards. They would bring me some personal enjoyment now and would hold their value until I pass away and then my kids could sell them. What do you think of this as a plan?
– Larry

Collectibles are a reasonable thing to invest in provided you’re okay with losing your shirt completely on the investment. Quite often, people invest in collectibles because there is additional personal value from that investment, as with the baseball cards in your case.

I would not invest a dime that you would regret not having if you lived another fifteen years. The market for any collectible rests heavily on the presence of willing buyers, and that’s always fraught with some uncertainty. If you are absolutely sure that you have excess money, then use only that excess money to buy.

Given my own experience, I would stick with investing only in professionally graded cards, where the condition of the cards has been professionally certified. Condition is often a big metric in the value of sports cards. I would also stick with vintage cards – the older, the better. I used to collect Goudy Gum cards from the 1930s, for example.

Q7: Roth TSP?
I work for the federal government, so I have access to the Thrift Savings Plan (TSP). Not too long from now they will be introducing a Roth TSP option, which looks to me like the basic TSP with after-tax contribution. Would you agree that this option is enticing? Would I be in any way better off choosing to stick with my normal TSP or by choosing a traditional Roth IRA (assuming that rates are higher when I retire and that I stay with the Government for a while)

For a bit of background, I’m a 24-year-old, fresh out of college, making about 55k/year pre-tax. I currently put 5% (matched) into my TSP, am building an emergency fund, and am paying off about 30k in student loans. I’ve managed to pay off all other debt :)
– Jeffrey

I agree that a Roth TSP is a great option for federal employees. More choices are always a good thing.

From what I’ve read, matching funds that you receive from your employer will go into the traditional TSP, not the Roth TSP. If that’s the case, I would probably fund the Roth TSP fully for the foreseeable future.

Why? I think it’s a good idea to balance Roth and regular TSP money. At this point, Jeff has money already in his TSP and his matching money will continue to go into his TSP. Thus, if he’s trying to balance things, he should put his money into the Roth.

Q8: Recovery in multiple ways
Two years ago, I became a drug addict. I tried something at a party and soon I felt like I couldn’t live without it. I destroyed my marriage. I lost my kids. I lost pretty much every possession I ever owned.

I’m now 29 years old and living with my parents. I’ve been clean for three months, but now I’m starting over financially and emotionally and in every other way. I’ve pretty much bombed my career path, too.

I’ve read a lot of advice books on where to go from here but I still feel lost. What do I do to get my career restarted again? What steps can I take to start a financial recovery?
– Margaret

Get your life right, first and foremost. Don’t worry about your career yet. Instead, make sure your health – physical, mental, and emotional – is as strong as you can get it.

Your options moving forward depend on a lot of things. Do you have a criminal record now? If you’ve been convicted of a felony, you may want to ask for some help in moving forward in the workplace. Is your credit still in good shape? I’d check my credit report (use annualcreditreport.com which is the free site provided by the federal government) and make sure everything on there is legitimate.

If you really burnt bridges in your previous career and can’t draw on references there, you may want to consider a new career path. This may involve going to trade school or going back to college, depending on what you want.

I’d also invest a lot of time in building a completely new social circle. I have had friends that have gone through a similar crisis as you and the best thing they did was ditching virtually all of their old circle and finding new people to associate with. Look in different places than you were looking before. If I were you, I’d think about things that interest you and seek out social opportunities related to those things.

Q9: How to start selling items
I am drowning in clutter. I want to sell things on Amazon, Craigs List and Ebay. But where and how do you start. I literally have one room filled to the rim with stuff. Any suggestions would be greatly appreciated.
– Linda

Your best bet would be to head to your local library and look for some basic books on selling on Craigslist and eBay and Amazon Marketplace. Most libraries will have some wonderful beginner books on the topic that explain, step by step, how to do it.

I’d also start slow. Don’t start out by listing 100 items or you’ll be overwhelmed. Take it slow and list just a few items at a time.

I’d also not get stressed out about the return you expect to get on the items. Many people expect to get maximum dollar for every item, and that’s simply not going to happen. Make sure that your cost of shipping is covered and that you’re earning a bit more, too, and be happy with that. Sinking many hours into a sale just to get $2 more is not worth it, especially when a big part of the goal is decluttering.

Q10: Great dryer sheet tactic
I re-use my used dryer sheets to clean out the bathroom sink, or cut soapy scum in the shower – they are amazing for that easy chore. Try it – you’ll like it.
– Lee

I did try it. I used a pair of old dryer sheets to clean out some soap scum in my shower – and it worked really well.

Obviously, these weren’t as durable as using a scrubber or something like that, but considering that these dryer sheets would otherwise get thrown away, it’s a really good tool.

I’ve started tossing old dryer sheets back into an empty dryer sheet box. I might as well use them for yet another task before I toss them!

Got any questions? Email them to me or leave them in the comments and I’ll attempt to answer them in a future mailbag (which, by way of full disclosure, may also get re-posted on other websites that pick up my blog). However, I do receive hundreds of questions per week, so I may not necessarily be able to answer yours.

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